Putting science first in creating and using the social cost of carbon

As nearly 200 countries are gathered at the UN climate summit COP27 in Egypt to discuss how to address climate change, the U.S. government is in the process of developing updated monetary estimates of the damages from emitting carbon dioxide (CO2) into the atmosphere. Specifically, the Biden administration just released a draft new methodology and estimates as part of a proposal to regulate methane emissions. Called the social cost of carbon (SCC), the estimates may influence much of what people do — from driving our cars and trucks, to heating and cooling our houses, running our factories, producing food, as well as powering our lights and phones. Given its potential impact, it is essential that we prioritize science to get it right

Estimating the SCC is a massive scientific undertaking because CO2 stays in the atmosphere for hundreds of yearsand causes effects beyond that to how the world stores and releases carbon. As a result, estimating the SCC requires modeling the world’s economic and physical systems for centuries into the future and considering an enormous amount of uncertainty in estimating the potential economic effects of climate change on agriculture, human health, energy and infrastructure, to name a few.

The current administration’s efforts to develop a new SCC methodology are in large part a response to a 2017 National Academies of Sciences (NAS) SCC committee and study that recommended replacing the approach developed in 2010. This is a committee on which I served. The NAS SCC committee was asked by the Obama administration to recommend methodological improvements but not asked to evaluate the reliability of the methods and estimates in use then and today.

Despite substantive critiques, such as missing functionality, poor representation of uncertainty, as well as lack of transparency and justification, the U.S. government framework developed in 2010 for estimating the SCC is still in use today to evaluate the potential climate benefits of proposed regulations. Those estimates have been considered for other purposes as well, such as valuing infrastructure projects, informing state regulations and by governments of other countries.

In addition, the framework has been used to estimate the benefits of reducing other greenhouse gases, such as methane from oil and gas development and landfills. That methodology, surprisingly, has not been subjected to a scientific review to determine whether it is scientifically reliable for informing decisions with the potential to shift trillions of dollars and reshape our economy. The development of a new methodology, however, provides an opportunity for putting science first to ensure results that are scientifically reliable and something in which the public can have confidence.

What would putting science first mean? It means following good scientific process to ensure the scientific robustness, reliability and stability of the SCC estimates. Not doing so, leaves the estimates vulnerable to scientific, political and public criticism, even manipulation. Such scientific due diligence includes assessing the science, providing transparency and justifying choices. It also includes developing a methodology fit for this purpose, separating science from policy, establishing robustness and using the estimates properly. Most importantly, it includes successfully completing an appropriate scientific review and engaging the public.

First, assessment of the many scientific studies and types of information from the relevant scientific disciplines is essential to ensure required functionality and to properly represent uncertainty. Clear communication and justification of all the methodological details, choices and results are also necessary to facilitate scientific community and public understanding and evaluation. More than descriptions are needed. All the choices need to be defended.

Second, the methodology needed to reliably inform policy is not something found in an academic journal article. It needs to be owned by the U.S. government and explicitly designed for robustness, reliability and public confidence, not intellectual merit.

The methodology development efforts to date have limited consideration to what is in the scientific literature, such as a model in a journal article. While this sounds appropriate, it is arbitrary and constrains the methodology to information designed for intellectual interest, not for robustness and reliability.

Third, it is crucial to keep in mind that SCC estimates are intended to inform policy decisions. They should not be used to make, influence or achieve policy goals, such as goals related to emissions reductions, global leadership, equity or justice. That is the role of the policies themselves, not the SCC. Embedding policy preferences within the SCC, such as in discounting future climate impacts, considering the geographic distribution of impacts, or providing guidance regarding which estimates to use, will create instability for planning, turning the estimates into political instruments that can change with administrations.

Fourth, with SCC estimatesshown to be extremely sensitive to alternative assumptions, and many reasonable alternative assumptions, developing robust estimates that are insensitive to alternatives requires modeling that accounts for the numerous uncertainties associated with projecting the world for centuries, as well as proving the robustness of SCC estimates to the public.

Fifth, is the importance of scientifically sound use of SCC estimates. To generate scientifically reliable insights regarding the potential climate and net benefits of policies that reduce CO2, important technical issues need to be addressed. These include accounting for emissions leakage outside policy boundaries, ensuring consistency in cost and benefit calculations, such as consistency in discount rates and assumed future economic activity, properly considering SCC estimate uncertainty, avoiding partial monetization of costs and benefits, as well as preventing overlapping policies that value the same carbon dioxide molecule more than once — for instance across policies considering fossil fuel resource extraction, combustion, and the procurement of the goods and services produced.

Finally, and most important of all, is a scientific review process appropriate for a regulatory methodology and public engagement. Such a review emphasizes scientific integrity and robustness to achieve public credibility for guiding decisions with significant social and financial implications.

The process must be rigorous and critical — reviewing every detail, choice and justification, as well as intermediate internal calculations and final estimates. This is a substantially higher bar than a journal article review. Furthermore, the set of reviewers needs to be transparently selected, include at least 14 members to ensure multiple experts for each of the relevant scientific disciplines, be free of conflicts of interest and be required to produce consensus recommendations agreed to by all the reviewers. This would include a consensus decision on whether the methodology and estimates are robust and reliable.

In addition, use of the new estimates would be prohibited until the reviewers have established the new methodology’s scientific reliability. Getting to this point may require methodological revisions in response to review panel feedback and then re-review by the panel. Fortunately, the U.S. government has indicated that it plans a peer review of its draft new methodology. However, the process for identifying reviewer candidates is not transparent and the nature of how the peer review will be conducted is unknown. For a credible result, it will need to be carried out as described above.

Public engagement will also be important to allow the public to provide feedback on the proposed methodology. This would occur within the peer review process to collect input from the broader research community, but there also needs to be a mechanism for stakeholder input in general.

Getting the SCC right is critical, and now we have the opportunity. With a new methodology likely to be informing federal policy decisions for a long time, and others likely to use the results, due scientific diligence is essential. Anything less entails short-cuts that undermine scientific credibility. The public needs robust, reliable and stable estimates to facilitate efficient public policies and private sector planning. If science is truly put first, it can deliver what the public needs.

Steven Rose, Ph.D., was a member of the National Academies of Sciences  Committee for Updating the Social Cost of Carbon. He was also an expert panelist for the U.S. Environmental Protection Agency’s Science Advisory Board, and he was recently a lead author on the economic impacts of climate change for the Intergovernmental Panel on Climate Change (IPCC). Rose is a senior researcher in the Energy Systems and Climate Analysis group at EPRI, a non-advocacy, non-profit scientific research organization.